Euroarea industrial output started Q3 on a weak footing

Eurozone industrial output drops in the month after Britain’s vote to leave the EU. Data released by the EU's statistics agency on Wednesday showed that Eurozone industrial output fell sharply in July by 1.1 percent compared to June and 0.5 percent versus a year earlier.

The monthly number was slightly worse than the 1 percent fall forecast, while year-on-year data was better than the 0.8 percent drop expected. Capital goods posted the biggest loss in July, falling 1.7 percent vs 1.6 percent prior. Durables drop 0.7 percent vs 1.2 percent in June.

Today’s data raises chances that industrial output will contract over Q3 as a whole. Disappointing numbers from Germany, the euro-area’s biggest economy, have raised questions over the extent to which the bloc has, and will be, affected by Britain’s decision to leave the EU. Capital Economics said the weakness in the Eurozone industry in July suggests that industrial production will struggle to expand at all over the third quarter.